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Does another notice need to be sent in Georgia if the project's contract amount increases significantly?

GeorgiaChange OrdersPreliminary NoticeRight to Lien
Anonymous Contractor

We've already sent a Notice to Contractor in GA for this job that originally listed as a $100,000 contract. Over the months the job has now increased to almost a million dollars in supplies. Do we need to send any other type of document or notice to be able to protect this large change in amounts? We also didn't file a Notice of Lien Rights, would that have any impact in our lien rights for this?

1 reply

Levelset Admin at Levelset
| 1,007 reviews
Mar 5, 2020
Generally, preliminary notices don't need to be revised when the value of work increases beyond initial expectations. More on that here: Is it OK to Send Revised Preliminary Notices? Does it Affect My Deadlines?

Georgia's Notice to Owner requirements

Looking at Georgia's Notice to Contractor requirements, found at GA Code § 44-14-361.5(c), the notice must include: "A description of the labor, services, or materials being provided and, if known, the contract price or anticipated value of the labor, services, or materials to be provided or the amount claimed to be due, if any." And, to be sure, there's nothing in that section that indicates a notice might need to be updated, or that updating the amount on a notice is even possible. So, the contract price or anticipated value of materials should be included when the notice is sent. And, it looks like there's a lot of flexibility built-in since the price must only be included "if known" and that it can even be the "anticipated value." If a sender had no way of knowing their contribution to the job would far exceed their initial contract price, then that original price or estimate should probably be sufficient as long as it was made in good faith. With that being said, $100,000 to $1M is a massive jump. So, notifying others on the project that the contribution far exceeds original estimates is probably a good idea. Whether that's done via an updated preliminary notice, via sharing documented change orders/invoices/purchase orders and explaining the situation, or done in some other way is probably up to the sender since there isn't clear guidance on how that should be done. Though, if a revised notice will be sent, it's probably a good idea to be extremely clear that a notice was previously sent - and, referencing the date the notice was previously sent and even including mail tracking information for that notice might help on that front.

Georgia's Preliminary Notice of Lien Rights

Filing a Preliminary Notice of Lien Rights will result in additional protection in Georgia, but filing one isn't always necessary. The main benefit of a Notice of Right to Lien is that a GC can't block the sender's lien rights if the GC swears to the owner (via affidavit or lien waiver) that all parties have been paid. But, if a GC does end up lying about whether they've paid all project participants, then the claimant would still have a number of legal recovery options. Often, subs and suppliers want to refrain from filing the notice and rocking the boat. But, for orders with extremely high values, it's probably less of a shock to other participants seeing a Notice of Lien Rights filed in the property record. While it's possible that not-filing a Notice of Lien Rights could negatively affect lien rights - that should only be the case if others on the job falsely asserted that everyone has been paid. Still, deciding not to file a Preliminary Notice of Lien Rights will result in lesser protection, even if it is industry norm in the state.

Consulting with a local Georgia construction attorney may provide additional clarity

Keep in mind that a local Georgia construction attorney might end up having different opinions about whether revised or updated notice might be acceptable. So, consulting a local Georgia construction attorney could help to get a second opinion considering the sizeable price of the materials being provided.
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